Showing posts with label mafia. Show all posts
Showing posts with label mafia. Show all posts
Sunday, 24 September 2023
Friday, 25 February 2022
Boris Johnson claims the UK is rooting out dirty Russian money. That’s ludicrous
Oliver Bullough in The Guardian
We were warned about Vladimir Putin – about his intentions, his nature, his mindset – and, because it was profitable for us, we ignored those warnings and welcomed his friends and their money. It is too late for us to erase our responsibility for helping Putin build his system. But we can still dismantle it and stop it coming back.Russia is a mafia state, and its elite exists to enrich itself. Democracy is an existential threat to that theft, which is why Putin has crushed it at home and seeks to undermine it abroad. For decades, London has been the most important place not only for Russia’s criminal elite to launder its money, but also for it to stash its wealth. We have been the Kremlin’s bankers, and provided its elite with the financial skills it lacks. Its kleptocracy could not exist without our assistance. The best time to do something about this was 30 years ago – but the second best time is right now.
We journalists have long been writing about this, but it is not simply overheated rhetoric from overexcited hacks. Parliament’s intelligence and security committee wrote two years ago that our investigative agencies are underfunded, our economy is awash with dirty money, and oligarchs have bought influence at the very top of our society.
The committee heard evidence from senior law enforcement and security officials. It laid out detailed, careful suggestions for what Britain should do to limit the damage Putin has already done to our society. Instead of learning from the report and implementing its proposals, Boris Johnson delayed its publication until after the general election and then, when further delay became impossible, dismissed those who took its sober analysis seriously as “Islingtonian remainers” seeking to delegitimise Brexit.
That is the crucial context for Johnson’s ludicrous claim this week to the House of Commons that no government could “conceivably be doing more to root out corrupt Russian money”. That is not only demonstrably untrue, it is an inversion of reality. On leaving the European Union, we were told that we could launch our own independent sanctions regime – and this week we saw the fruit of it: a response markedly weaker than those of Brussels and Washington.
The Liberal Democrat MP Layla Moran, speaking with parliamentary privilege on Tuesday, listed the names of 35 alleged key Putin “enablers” whom the Russian opposition politician Alexei Navalny has asked to be sanctioned. Blocking the assets of everyone on that list and their close relatives would be a truly significant response from Johnson to the gravity of the situation. But it would still only be a start.
Relying solely on sanctions now is like stamping on a car’s accelerator when you’ve failed for years to maintain the engine, pump up the tyres or fill up the tank, yet still expect it to hit 95mph. Other announcements in the last couple of days have amounted to nothing more than painting on go-faster stripes. Tackling the UK’s role in enabling Putin’s kleptocracy, and containing the threat his allies pose to democracy here and elsewhere, will require far more than just banning golden visas or Kremlin TV stations.
For a start, we need to know who owns our country. Some 87,000 properties in England and Wales are owned via offshore companies – which prevents us seeing who their true owners are or if they were bought with criminal money. Companies House makes no checks on registrations, which is why UK shell structures have featured in most Russian money-laundering scandals. Imposing transparency on the ownership of dirty money in this way would strike at the heart of the London money-laundering machine. Governments have promised to do this “when parliamentary time allows” for years, yet the time has never been found, and instead they’ve listened to concerns from the City that such regulations would harm its competitiveness.
Above all, we need to fund our enforcement agencies as generously as oligarchs fund their lawyers: you can’t fight grand corruption on the cheap. Even good policies of recent years, such as the “unexplained wealth orders” of 2017, which were designed to tackle criminally owned assets hidden behind clever shell structures, have largely failed because investigators lack the funds to use them. We must spend what it takes to drive kleptocratic cash out of the country.
Johnson is not the first prime minister to fail to rise to the challenge – Tony Blair and David Cameron both schmoozed with Putin even when it was obvious what kind of a leader he was. And I don’t think Johnson is personally corrupt or tainted by Russian money; he’s lazy, flippant and unwilling to launch expensive, laborious initiatives that will bring results only long after he himself has left office and is unable to take the credit for them. It is time, however, for his colleagues to step up and force him into action. This is a serious moment, and it requires serious people willing to invest in the long-term security of our country and the future of democracy everywhere.
Monday, 4 October 2021
Tuesday, 3 April 2018
India's 'cheating mafia' gets to work as school exam season hits
Vast network profits from the desperation of students and parents to get ahead in a country where university places and jobs are limited
Michael Safi in The Guardian
Michael Safi in The Guardian
Men at stalls selling schoolbooks on College Road in Kolkata at the height of India’s annual exam season Photograph: Michael Safi
Afew minutes into the final year maths exam at his Delhi high school, Raghav asked to use the bathroom. Inside, he texted pictures of the test paper he had secretly photographed to a phone number he was sent days before. Minutes later, answers materialised on the screen.
“It isn’t cheating,” insists his mother Sunita, who paid 16,000 rupees (£175) for her son to obtain the phone number. “It’s a way out.”
India’s annual exam season has gripped the country in the last month, with tens of millions of students undertaking gruelling tests to qualify for the limited slots available at Indian universities – the best of them with admission rates about one-tenth those of Oxford and Cambridge.
Also hard at work is the country’s so-called “cheating mafia”, the vast network aimed at profiting from the desperation of students and parents to get ahead in a country where, each year, an estimated 17 million people join a workforce adding only 5.5m jobs.
Last week, in the latest high-profile breach, the papers for two secondary exams were found to have been leaked on WhatsApp about 90 minutes before the tests. More than 2.8 million students in Delhi and the surrounding areas have been ordered to resit the exams later in April.
“It is mental torture,” said Kirath Kaul, 15, an east Delhi student who will be forced to sit a new maths exam this month. “I was spending all day study [for the last one] and even getting up at night to prepare.”
‘A broken education system’
Cheating on exams in India is endemic, organised and elaborate. In Bihar, one of the poorest states in the country, more than 1,000 students were expelled for cheating in February.
Last year, the student who topped the state in one subject, arts, turned out to be a 42-year-old man. The student with the highest arts score in 2016 was stripped of her certificate after arousing suspicions, including by telling a TV interviewer she believed political science was the study of cooking.
In 2015, Bihar made global headlines when videos emerged showing parents literally scaling a five-storey building to pass answers to their children taking exams inside. This year, to ensure probity, the state installed CCTV cameras in exam halls and made every student leave their shoes and socks at the door.
“This is very much the sign of a broken education system,” says Yamini Aiyar, the chief executive of the Centre for Policy Research.
She blames the widespread fraud on a cocktail of intense pressure to earn a university qualification and a system that has been focused on building new schools, but unconcerned about what happens inside them.
“Studies tell us that on average about half of students that get to Standard 5 can read a Standard 2 text,” she says.
Incentives for teachers and administrators are also askew, she adds, measuring success and doling out promotions based on what percentage of children in a school or district are passing their exams. Officials are incentivised either to assist in the cheating or overlook it.
Sunita, who asked for her name to be changed for legal reasons, came into contact with India’s “cheating mafia” through the exam coaching centre Raghav have been attending before his final exams last year.
“The teacher said, your son is very weak ma’am,” she recalls. “My son was not interested in studying and I didn’t want him to repeat the year.”
The private tutor offered to connect with someone who could send Raghav the answers for his economics and mathematics papers. Nobody on either end of the phone would know each others’ identity. She signed up with four or five other families.
“It is totally common,” she says. And lucrative. “All of us probably paid this man about 60,000 rupees.”
India’s cheating industry has proliferated alongside others kinds of organised fraud such as call-centre scams, and is driven by a similar mentality, says Snigdha Poonam, author of a new book about the ambition and guile of Indian youth.
Social mobility in India is improving, according to surveys. But not fast enough to match the expectations of a generation reared on social media, western pop culture, and promises that India’s time has finally come. “The same forces drive young Indians into entering these economies built on fraud,” she says.
“[It is] the lack of legitimate options in the formal job market, a blurring of lines between honest and dishonest work, an ability to identify market gaps for services, and the resourcefulness to turn them into avenues for easy money.”
With the aid of his cheating hotline, Raghav passed all his subjects. He is now taking private photography classes and aims to make a career with his camera. Kaul, meanwhile, is studying hard, preparing to take her maths exam again on 25 April.
“But I’m worried the cheaters will perform better [than me],” she says. “I work very hard, but people only see the result – not that someone has cheated.”
Afew minutes into the final year maths exam at his Delhi high school, Raghav asked to use the bathroom. Inside, he texted pictures of the test paper he had secretly photographed to a phone number he was sent days before. Minutes later, answers materialised on the screen.
“It isn’t cheating,” insists his mother Sunita, who paid 16,000 rupees (£175) for her son to obtain the phone number. “It’s a way out.”
India’s annual exam season has gripped the country in the last month, with tens of millions of students undertaking gruelling tests to qualify for the limited slots available at Indian universities – the best of them with admission rates about one-tenth those of Oxford and Cambridge.
Also hard at work is the country’s so-called “cheating mafia”, the vast network aimed at profiting from the desperation of students and parents to get ahead in a country where, each year, an estimated 17 million people join a workforce adding only 5.5m jobs.
Last week, in the latest high-profile breach, the papers for two secondary exams were found to have been leaked on WhatsApp about 90 minutes before the tests. More than 2.8 million students in Delhi and the surrounding areas have been ordered to resit the exams later in April.
“It is mental torture,” said Kirath Kaul, 15, an east Delhi student who will be forced to sit a new maths exam this month. “I was spending all day study [for the last one] and even getting up at night to prepare.”
‘A broken education system’
Cheating on exams in India is endemic, organised and elaborate. In Bihar, one of the poorest states in the country, more than 1,000 students were expelled for cheating in February.
Last year, the student who topped the state in one subject, arts, turned out to be a 42-year-old man. The student with the highest arts score in 2016 was stripped of her certificate after arousing suspicions, including by telling a TV interviewer she believed political science was the study of cooking.
In 2015, Bihar made global headlines when videos emerged showing parents literally scaling a five-storey building to pass answers to their children taking exams inside. This year, to ensure probity, the state installed CCTV cameras in exam halls and made every student leave their shoes and socks at the door.
“This is very much the sign of a broken education system,” says Yamini Aiyar, the chief executive of the Centre for Policy Research.
She blames the widespread fraud on a cocktail of intense pressure to earn a university qualification and a system that has been focused on building new schools, but unconcerned about what happens inside them.
“Studies tell us that on average about half of students that get to Standard 5 can read a Standard 2 text,” she says.
Incentives for teachers and administrators are also askew, she adds, measuring success and doling out promotions based on what percentage of children in a school or district are passing their exams. Officials are incentivised either to assist in the cheating or overlook it.
Sunita, who asked for her name to be changed for legal reasons, came into contact with India’s “cheating mafia” through the exam coaching centre Raghav have been attending before his final exams last year.
“The teacher said, your son is very weak ma’am,” she recalls. “My son was not interested in studying and I didn’t want him to repeat the year.”
The private tutor offered to connect with someone who could send Raghav the answers for his economics and mathematics papers. Nobody on either end of the phone would know each others’ identity. She signed up with four or five other families.
“It is totally common,” she says. And lucrative. “All of us probably paid this man about 60,000 rupees.”
India’s cheating industry has proliferated alongside others kinds of organised fraud such as call-centre scams, and is driven by a similar mentality, says Snigdha Poonam, author of a new book about the ambition and guile of Indian youth.
Social mobility in India is improving, according to surveys. But not fast enough to match the expectations of a generation reared on social media, western pop culture, and promises that India’s time has finally come. “The same forces drive young Indians into entering these economies built on fraud,” she says.
“[It is] the lack of legitimate options in the formal job market, a blurring of lines between honest and dishonest work, an ability to identify market gaps for services, and the resourcefulness to turn them into avenues for easy money.”
With the aid of his cheating hotline, Raghav passed all his subjects. He is now taking private photography classes and aims to make a career with his camera. Kaul, meanwhile, is studying hard, preparing to take her maths exam again on 25 April.
“But I’m worried the cheaters will perform better [than me],” she says. “I work very hard, but people only see the result – not that someone has cheated.”
Wednesday, 20 April 2016
Only a dream can end a nightmare
Jawed Naqvi in The Dawn
INDIA may be waking up from its unwarranted nightmare. A call has gone out from the head of its most impoverished and second-most populous province to cobble an anti-Hindutva alliance to foil a fascist takeover. The conditions look ripe. The economy is not shining.
There are many explanations. One is the piranha-like tycoons spawned by a neo-liberal ruling clique. In the rest of the world, neo-liberalism is being questioned. Bernie Sanders and Jeremy Corbyn have lent voice to a global movement in India too. When university campuses reverberated with socialist slogans recently, the government moved swiftly to muzzle them. It contrived and slapped sedition charges on some of the most inspiring student leaders the country has seen.
Another explanation for the economic mess lies in straightforward loot. The mercantile capitalists embraced by Gandhi as the ‘trustees’ of free India have literally walked away with mega tons of people’s money. They have shown the banks a clean pair of heels. The Supreme Court is furious and wants names named. The national security adviser has stepped in with a more riveting agenda. He wants the courts to focus on national security instead; in other words to hang and jail more people, more swiftly.
To compound the nation’s woes, drought has arrived and monsoons are not due for at least two more scorching months. Much of the suffering this entails is predictably man-made. Millions are being kept parched so that the water tanker mafia, among other connected crony entrepreneurs, prospers.
Jack Nicholson as a sleuth investigated the great water heist in the formative days of California. That was in Polanski’s Chinatown when the snoopy hero nearly got his nose fed to the villain’s goldfish. A few good Indian journalists, led by Sreenivasan Jain and P. Sainath, are showing the red flag from parched swathes. Himanshu Thakkar, India’s respected expert on water management, is warning against its plunder in the heart of drought land, on lush golf courses.
The revered cow, essence of India’s refurbished nationhood, is in trouble. Many will perish by hunger, others by choking on plastic bags they scrounge in the absence of fodder. (The incidence of pedigree dogs being abandoned has increased, an indication that the urban middle class is feeling the pinch.)
An inordinately high number of farmers may be unable to stand up to the grim prospects. Some have committed suicide. Many more look just as vulnerable and could face starvation. The water minister says there is neither any need nor a way to prepare for a drought. A farmer’s two kindergarten children were on TV, sent off to Mumbai to find work and food.
Meanwhile, more illicit money has been found abroad. The Panama Papers could be only the tip of the iceberg. A two-year-old promise by the prime minister that he would put Indian Rs1.5 million from a separate tranche of retrieved money in everyone’s account has lapsed. His alter ego and party chief has described the promise as poll-year comment, not to be taken literally.
People are cursing their luck. The government is cursing the people. A faulty flyover being constructed in Kolkata has collapsed. The prime minister, in his election outfit, called it God’s curse on the ruling party of West Bengal. Then there was another man-made tragedy, in a temple in Kerala this time. Did we see someone biting his reckless tongue?
Being clumsy with rural folk has usually incurred a cost. Indian history is littered with episodes of peasant revolts. Drought and exploitation were and are at the source. The Patidar Movement of capitalist farmers in Gujarat is spinning out of control. The Jats are another prosperous agrarian community. They were used cynically against Muslims in western Uttar Pradesh. The ploy worked and it catapulted Modi in the general election. Now, faced with broken populist promises (which probably were not meant to be taken literally) the Jats are bracing for a showdown.
Remember that the Sikh peasants rose against the mighty Mughal empire and have refused to be subdued till today. When the state under Indira Gandhi sent the army against them, Sikh peasant-soldiers deserted the military in large numbers. The Indian Express report on Monday told a similar story from Haryana. Jat “policemen deserted their posts, sided with protesters,” said the front page lead story. The number of police deserters belonging to the Jat community was in the hundreds, the newspaper said, quoting unnamed highly placed sources privy to an official report being prepared on the flare-up.
History repeats itself, and that’s not a hollow cliché. With food scarcity in 1832 in Maharashtra, which is also the venue of India’s worst drought today, food riots spread against the moneylenders many of whose ilk form the current ruling elite. As for drought, peasants have historically attacked grain traders for practising witchcraft whereby they could stop rain. All this is recorded history.
We therefore need to take very seriously what Bihar chief minister Nitish Kumar says for he is nothing if not a brilliant peasant leader. A day after becoming party chief last week, he demanded the “largest possible unity” against the BJP by bringing Congress, the Left and regional parties on one platform before the 2019 general elections.
There are crucial elections under way in four or five states. The BJP has little to no chance in West Bengal, Kerala or Tamil Nadu. If at all it makes headway it should be in Assam. But this could not be a reason for anyone to rest on his or her laurels. India is in ferment, and its people cannot afford to be caught napping yet again.
INDIA may be waking up from its unwarranted nightmare. A call has gone out from the head of its most impoverished and second-most populous province to cobble an anti-Hindutva alliance to foil a fascist takeover. The conditions look ripe. The economy is not shining.
There are many explanations. One is the piranha-like tycoons spawned by a neo-liberal ruling clique. In the rest of the world, neo-liberalism is being questioned. Bernie Sanders and Jeremy Corbyn have lent voice to a global movement in India too. When university campuses reverberated with socialist slogans recently, the government moved swiftly to muzzle them. It contrived and slapped sedition charges on some of the most inspiring student leaders the country has seen.
Another explanation for the economic mess lies in straightforward loot. The mercantile capitalists embraced by Gandhi as the ‘trustees’ of free India have literally walked away with mega tons of people’s money. They have shown the banks a clean pair of heels. The Supreme Court is furious and wants names named. The national security adviser has stepped in with a more riveting agenda. He wants the courts to focus on national security instead; in other words to hang and jail more people, more swiftly.
To compound the nation’s woes, drought has arrived and monsoons are not due for at least two more scorching months. Much of the suffering this entails is predictably man-made. Millions are being kept parched so that the water tanker mafia, among other connected crony entrepreneurs, prospers.
Jack Nicholson as a sleuth investigated the great water heist in the formative days of California. That was in Polanski’s Chinatown when the snoopy hero nearly got his nose fed to the villain’s goldfish. A few good Indian journalists, led by Sreenivasan Jain and P. Sainath, are showing the red flag from parched swathes. Himanshu Thakkar, India’s respected expert on water management, is warning against its plunder in the heart of drought land, on lush golf courses.
The revered cow, essence of India’s refurbished nationhood, is in trouble. Many will perish by hunger, others by choking on plastic bags they scrounge in the absence of fodder. (The incidence of pedigree dogs being abandoned has increased, an indication that the urban middle class is feeling the pinch.)
An inordinately high number of farmers may be unable to stand up to the grim prospects. Some have committed suicide. Many more look just as vulnerable and could face starvation. The water minister says there is neither any need nor a way to prepare for a drought. A farmer’s two kindergarten children were on TV, sent off to Mumbai to find work and food.
Meanwhile, more illicit money has been found abroad. The Panama Papers could be only the tip of the iceberg. A two-year-old promise by the prime minister that he would put Indian Rs1.5 million from a separate tranche of retrieved money in everyone’s account has lapsed. His alter ego and party chief has described the promise as poll-year comment, not to be taken literally.
People are cursing their luck. The government is cursing the people. A faulty flyover being constructed in Kolkata has collapsed. The prime minister, in his election outfit, called it God’s curse on the ruling party of West Bengal. Then there was another man-made tragedy, in a temple in Kerala this time. Did we see someone biting his reckless tongue?
Being clumsy with rural folk has usually incurred a cost. Indian history is littered with episodes of peasant revolts. Drought and exploitation were and are at the source. The Patidar Movement of capitalist farmers in Gujarat is spinning out of control. The Jats are another prosperous agrarian community. They were used cynically against Muslims in western Uttar Pradesh. The ploy worked and it catapulted Modi in the general election. Now, faced with broken populist promises (which probably were not meant to be taken literally) the Jats are bracing for a showdown.
Remember that the Sikh peasants rose against the mighty Mughal empire and have refused to be subdued till today. When the state under Indira Gandhi sent the army against them, Sikh peasant-soldiers deserted the military in large numbers. The Indian Express report on Monday told a similar story from Haryana. Jat “policemen deserted their posts, sided with protesters,” said the front page lead story. The number of police deserters belonging to the Jat community was in the hundreds, the newspaper said, quoting unnamed highly placed sources privy to an official report being prepared on the flare-up.
History repeats itself, and that’s not a hollow cliché. With food scarcity in 1832 in Maharashtra, which is also the venue of India’s worst drought today, food riots spread against the moneylenders many of whose ilk form the current ruling elite. As for drought, peasants have historically attacked grain traders for practising witchcraft whereby they could stop rain. All this is recorded history.
We therefore need to take very seriously what Bihar chief minister Nitish Kumar says for he is nothing if not a brilliant peasant leader. A day after becoming party chief last week, he demanded the “largest possible unity” against the BJP by bringing Congress, the Left and regional parties on one platform before the 2019 general elections.
There are crucial elections under way in four or five states. The BJP has little to no chance in West Bengal, Kerala or Tamil Nadu. If at all it makes headway it should be in Assam. But this could not be a reason for anyone to rest on his or her laurels. India is in ferment, and its people cannot afford to be caught napping yet again.
Tuesday, 12 April 2016
Smash the mafia elite: we should treat offshore wealth as terrorist finance
Paul Mason in The Guardian
Historical societies withered because the rich did not pay their taxes – we must not let the Panama Papers revelations pass without taking action
Governments today, like that of Perugia in the mid-1400s, are stuffed full of people who benefit from a legalised form of corruption. Photograph: Julian Elliott/Getty Images/Robert Harding Worl
The size of the missing tax take is disputed. If, as the Tax Justice Network estimates, the global wealth held offshore is $21tn, it might generate $188bn a year for cash-strapped governments.
Why don’t they act? Because, as with the government of Perugia in the mid 1400s, they are stuffed full of people who benefit.
Why doesn’t the populace revolt? Well, the problem with a globalised economy composed of nation states is that you can revolt all you like, beef up national tax systems, even expose the doings of the rich in newspapers ... but as long as the concept of “offshore” exists, so will the legalised corruption.
To the mature democracies of the world, the Panama Papers – as with the Lux Leaks, Swiss Leaks and numerous other data dumps before them – are a warning. If wealth equals power, then the doubling of ratio of wealth to income in the advanced economies since the 70s (see Piketty and Zucman 2014) could tilt power so far in the direction of a new hereditary elite that there is no return.
Last week, Costas Efimeros, the editor of a Greek investigative website, warned that the Panama revelations might be the “last chance” for leak-journalism. If a revelation does not provoke outrage, and the wrongdoers go unpunished, he wrote, “then the continuous revelation of scandals has the exact opposite result: defeatism, the feeling of weakness, the fatalistic acceptance of the rule of the powerful”.
If he is right, there are implications for all of us locked into this scrum around documents, reputations, professional codes and disputed facts.
First, this has to result in action. I am less concerned with taking down an already hapless British prime minister than with empowering him, or his successor, with the will to act unilaterally.
Britain could and should take direct rule of its tax-opaque dependencies. It should abolish non-domicile status. And it should create a taskforce within HMRC specifically designed to prosecute evaders and collect money from the aggressive avoiders.
Second, it has to result in words. I would settle for a prime-ministerial statement to be read out at Oxbridge colleges, public schools and in every bank, law firm and adviser registered with the FSA. It should say: “It’s over. There are no more respectable forms of tax avoidance and from now on offshore wealth will be treated the same way we treat terrorist finance.”
Third, it should be unilateral. The great lesson of the Italian city states in the high Renaissance was that if you will it, it can happen. You can will an economy where science, innovation, art and banking coincide: talented people get rich, inherited wealth soon evaporates; rulers listen to demands for social justice – and if they don’t, they burn.
Acting unilaterally goes against the DNA of the globalised elite. Their “nation” is the global system, and it’s seen as heresy for one country to act without others. “If we do, money will simply move offshore,” is the mantra. “Let it go,” should be the response.
Unilateral action by the UK would be powerful. It would disrupt the system of organised corruption and it would send a signal. We want to enjoy the best of what the next 20 years can offer our population – not the second best after a 1% elite has skimmed off the cream.
We don’t want to be a neo-feudal backwater, where inherited wealth and an unofficial mafia rules. We want to be the Florence, Bruges or Amsterdam of the coming century, not the Perugia.
Historical societies withered because the rich did not pay their taxes – we must not let the Panama Papers revelations pass without taking action
Panama Papers demonstration in Whitehall on Saturday. Photograph: Rex/Shutterstock
Amid the cobbled passageways and tumbling tenements of the Italian city of Perugia, it’s possible to daydream you are in the middle ages. You are surrounded by medieval art and architecture. And then you think: hold on, what happened to the Renaissance?
Sure, there are some imposing private palaces from the period 1300-1500, and sure Raphael left half a fresco in a tiny chapel. But it’s not Florence. The money was clearly here at some point but, some time after 1300, the artistic, cultural and scientific riches moved somewhere else. By 1500, the city was “smaller, poorer and politically narrower” than 200 years before, writes historian Sarah Rubin Blanshei.
Why? Because the rich did not pay their taxes. The Perugian elite became a closed stratum of mafiosi, earning their money from mercenary work abroad, jealously guarding their family inheritance, stifling social mobility. Sound familiar?
As David Cameron’s fiasco over the Panama Papers collides with George Osborne’s over the budget, the danger is that we frame these merely as political scandals.
In fact, the Panama Papers point to a deeper sickness. Globalised capitalism has become an organised and legalised form of corruption, in which the work of the manager, the inventor and the entrepreneur come second to that of people whose wealth “works for them” – preferably in a jurisdiction nobody can see.
If you listen to Cameron’s defenders, their logic follows three contours: he did nothing illegal, nothing unparliamentary and nothing wrong.
I do not doubt his decision to invest in an offshore fund was legal.
That he failed to register his shares in Blairmore on becoming an MP, and lobbied for the protection of offshore trusts while being an undeclared beneficiary of one, does merit investigation by Parliament.
But it’s the insistence by the apopleptic right that he should not be criticised over tax avoidance – that “everybody does it” – that we should register as a kind of collective Marie Antoinette moment for the UK’s social elite.
If someone walked into a pub and announced they had found a way to scam the benefit system, they would face opprobrium or a swift, anonymous call to the benefit cheats hotline.
But a large part of the UK financial industry is dedicated to scamming the rules whereby both individuals and companies pay tax on income. London is home to literally hundreds of advisory companies – many of them registered professionals in finance, accountancy and the law – whose purpose is to do only this.
Amid the cobbled passageways and tumbling tenements of the Italian city of Perugia, it’s possible to daydream you are in the middle ages. You are surrounded by medieval art and architecture. And then you think: hold on, what happened to the Renaissance?
Sure, there are some imposing private palaces from the period 1300-1500, and sure Raphael left half a fresco in a tiny chapel. But it’s not Florence. The money was clearly here at some point but, some time after 1300, the artistic, cultural and scientific riches moved somewhere else. By 1500, the city was “smaller, poorer and politically narrower” than 200 years before, writes historian Sarah Rubin Blanshei.
Why? Because the rich did not pay their taxes. The Perugian elite became a closed stratum of mafiosi, earning their money from mercenary work abroad, jealously guarding their family inheritance, stifling social mobility. Sound familiar?
As David Cameron’s fiasco over the Panama Papers collides with George Osborne’s over the budget, the danger is that we frame these merely as political scandals.
In fact, the Panama Papers point to a deeper sickness. Globalised capitalism has become an organised and legalised form of corruption, in which the work of the manager, the inventor and the entrepreneur come second to that of people whose wealth “works for them” – preferably in a jurisdiction nobody can see.
If you listen to Cameron’s defenders, their logic follows three contours: he did nothing illegal, nothing unparliamentary and nothing wrong.
I do not doubt his decision to invest in an offshore fund was legal.
That he failed to register his shares in Blairmore on becoming an MP, and lobbied for the protection of offshore trusts while being an undeclared beneficiary of one, does merit investigation by Parliament.
But it’s the insistence by the apopleptic right that he should not be criticised over tax avoidance – that “everybody does it” – that we should register as a kind of collective Marie Antoinette moment for the UK’s social elite.
If someone walked into a pub and announced they had found a way to scam the benefit system, they would face opprobrium or a swift, anonymous call to the benefit cheats hotline.
But a large part of the UK financial industry is dedicated to scamming the rules whereby both individuals and companies pay tax on income. London is home to literally hundreds of advisory companies – many of them registered professionals in finance, accountancy and the law – whose purpose is to do only this.
Governments today, like that of Perugia in the mid-1400s, are stuffed full of people who benefit from a legalised form of corruption. Photograph: Julian Elliott/Getty Images/Robert Harding Worl
The size of the missing tax take is disputed. If, as the Tax Justice Network estimates, the global wealth held offshore is $21tn, it might generate $188bn a year for cash-strapped governments.
Why don’t they act? Because, as with the government of Perugia in the mid 1400s, they are stuffed full of people who benefit.
Why doesn’t the populace revolt? Well, the problem with a globalised economy composed of nation states is that you can revolt all you like, beef up national tax systems, even expose the doings of the rich in newspapers ... but as long as the concept of “offshore” exists, so will the legalised corruption.
To the mature democracies of the world, the Panama Papers – as with the Lux Leaks, Swiss Leaks and numerous other data dumps before them – are a warning. If wealth equals power, then the doubling of ratio of wealth to income in the advanced economies since the 70s (see Piketty and Zucman 2014) could tilt power so far in the direction of a new hereditary elite that there is no return.
Last week, Costas Efimeros, the editor of a Greek investigative website, warned that the Panama revelations might be the “last chance” for leak-journalism. If a revelation does not provoke outrage, and the wrongdoers go unpunished, he wrote, “then the continuous revelation of scandals has the exact opposite result: defeatism, the feeling of weakness, the fatalistic acceptance of the rule of the powerful”.
If he is right, there are implications for all of us locked into this scrum around documents, reputations, professional codes and disputed facts.
First, this has to result in action. I am less concerned with taking down an already hapless British prime minister than with empowering him, or his successor, with the will to act unilaterally.
Britain could and should take direct rule of its tax-opaque dependencies. It should abolish non-domicile status. And it should create a taskforce within HMRC specifically designed to prosecute evaders and collect money from the aggressive avoiders.
Second, it has to result in words. I would settle for a prime-ministerial statement to be read out at Oxbridge colleges, public schools and in every bank, law firm and adviser registered with the FSA. It should say: “It’s over. There are no more respectable forms of tax avoidance and from now on offshore wealth will be treated the same way we treat terrorist finance.”
Third, it should be unilateral. The great lesson of the Italian city states in the high Renaissance was that if you will it, it can happen. You can will an economy where science, innovation, art and banking coincide: talented people get rich, inherited wealth soon evaporates; rulers listen to demands for social justice – and if they don’t, they burn.
Acting unilaterally goes against the DNA of the globalised elite. Their “nation” is the global system, and it’s seen as heresy for one country to act without others. “If we do, money will simply move offshore,” is the mantra. “Let it go,” should be the response.
Unilateral action by the UK would be powerful. It would disrupt the system of organised corruption and it would send a signal. We want to enjoy the best of what the next 20 years can offer our population – not the second best after a 1% elite has skimmed off the cream.
We don’t want to be a neo-feudal backwater, where inherited wealth and an unofficial mafia rules. We want to be the Florence, Bruges or Amsterdam of the coming century, not the Perugia.
Sunday, 13 September 2015
Britain - The Mafia State
George Monbiot in Outlook India
Be reasonable in response to the unreasonable: this is what voters in the Labour election are told. Accommodate, moderate, triangulate, for the alternative is to isolate yourself from reality. You might be inclined to agree. If so, please take a look at the reality to which you must submit.
To an extent unknown since before the First World War, economic relations in this country are becoming set in stone. It's not just that the very rich no longer fall while the very poor no longer rise. It's that the system itself is protected from risk. Through bail-outs, quantitative easing and delays in interest rate rises, speculative investment has been so well cushioned that, as Larry Elliott puts it, financial markets are "one of the last bastions of socialism left on earth."
Public services, infrastructure, the very fabric of the nation: these too are being converted into risk-free investments. Social cleansing is transforming inner London into an exclusive economic zone for property speculation. From a dozen directions, government policy converges on this objective. The benefits cap and the bedroom tax drive the poor out of their homes. The forced sale of high-value council houses creates a new asset pool. An uncapped and scarcely regulated private rental market turns these assets into gold. The freeze on council tax banding since 1991, the lifting of the inheritance tax threshold and £14 billion a year in breaks for private landlords all help to guarantee stupendous returns.
And for those who wish simply to sit on their assets, the government can help here too, by ensuring that there are no penalties for leaving buildings empty. As a result, great tracts of housing are removed from occupation. Agricultural land has proved an even better punt for City money: with the help of capital gains, inheritance and income tax exemptions, as well as farm subsidies, its price has quadrupled in 12 years.
Property in this country is a haven for the proceeds of international crime. The head of the National Crime Agency, Donald Toon, notes that "the London property market has been skewed by laundered money. Prices are being artificially driven up by overseas criminals who want to sequester their assets here in the UK."
It's hardly surprising, given the degree of oversight. Private Eye has produced a map of British land owned by companies registered in offshore tax havens. The holdings amount to 1.2 million acres, including much of our prime real estate. Among those it names as beneficiaries are a cast of Russian oligarchs, oil sheikhs, British aristocrats and newspaper proprietors. These are the people for whom government policy works, and the less regulated the system that enriches them, the happier they are.
The speculative property market is just one current in the great flow of cash that sluices through Britain while scarcely touching the sides. The financial sector exploits an astonishing political privilege: the City of London is the only jurisdiction in the UK not fully subject to the authority of parliament. In fact, the relationship seems to work the other way. Behind the Speaker's chair in the House of Commons sits the Remembrancer, whose job is to ensure that the interests of the City of London are recognised by the elected members. (A campaign to rescind this privilege — Don't Forget the Remembrancer — will be launched very soon). The City has one foot in the water: it is a semi-offshore state, a bit like the UK's Crown dependencies and overseas territories, tax havens legitimised by the Privy Council. Britain's financial secrecy undermines the tax base while providing a conduit into the legal economy for gangsters, kleptocrats and drug barons.
Even the more orthodox financial institutions deploy a long succession of scandalous practices: pension mis-selling, endowment mortgage fraud, the payment protection insurance con, Libor rigging. A former minister in the last government, Lord Green, ran HSBC while it engaged in money laundering for drugs gangs, systematic tax evasion and the provision of services to Saudi and Bangladeshi banks linked to the financing of terrorists. Sometimes the UK looks to me like an ever-so-civilised mafia state.
At next month's Conservative party conference, corporate executives will pay £2,500 to sit with a minister. Doubtless, because we are assured that there is no link between funding and policy, they will spend the day discussing the weather and the films they have seen. If we noticed such arrangements overseas, we might be inclined to regard them as corruption. But that can't be the case here, not least because the invitation explains that "fees associated with business day & dinner are considered a commercial transaction and therefore do not constitute a political donation."
The government also insists that there is no link between political donations and seats in the House of Lords. But a study by researchers at Oxford University found that the probability of so many major donors arriving there by chance is 1.36 x 10-38: roughly "equivalent to entering the National Lottery and winning the jackpot 5 times in a row". Why does the Lords remain unreformed? Because it permits plutocratic power to override democracy. Both rich and poor are kept in their place.
Governed either by or on behalf of the people who fleece us, we cannot be surprised to discover that all public services are being re-engineered for the benefit of private capital. Nor should we be surprised when governments help to negotiate, without public consent, treaties such as TTIP and CETA (the Comprehensive Economic and Trade Agreement), which undermine the sovereignty of both parliament and the law. Aesop's observation that "we hang the petty thieves and appoint the great ones to public office" remains true in spirit, though hanging has been replaced by community payback.
Wherever you sniff in British public life, something stinks: I could fill this newspaper with examples. But, while every pore oozes corruption, our task, we are told, is merely to trim the nails of the body politic.
To fail to confront this system is to collaborate with it. Who on the left would wish to stand on the sidelines as this carve-up continues? Who would vote for anything but sweeping change?
Be reasonable in response to the unreasonable: this is what voters in the Labour election are told. Accommodate, moderate, triangulate, for the alternative is to isolate yourself from reality. You might be inclined to agree. If so, please take a look at the reality to which you must submit.
To an extent unknown since before the First World War, economic relations in this country are becoming set in stone. It's not just that the very rich no longer fall while the very poor no longer rise. It's that the system itself is protected from risk. Through bail-outs, quantitative easing and delays in interest rate rises, speculative investment has been so well cushioned that, as Larry Elliott puts it, financial markets are "one of the last bastions of socialism left on earth."
Public services, infrastructure, the very fabric of the nation: these too are being converted into risk-free investments. Social cleansing is transforming inner London into an exclusive economic zone for property speculation. From a dozen directions, government policy converges on this objective. The benefits cap and the bedroom tax drive the poor out of their homes. The forced sale of high-value council houses creates a new asset pool. An uncapped and scarcely regulated private rental market turns these assets into gold. The freeze on council tax banding since 1991, the lifting of the inheritance tax threshold and £14 billion a year in breaks for private landlords all help to guarantee stupendous returns.
And for those who wish simply to sit on their assets, the government can help here too, by ensuring that there are no penalties for leaving buildings empty. As a result, great tracts of housing are removed from occupation. Agricultural land has proved an even better punt for City money: with the help of capital gains, inheritance and income tax exemptions, as well as farm subsidies, its price has quadrupled in 12 years.
Property in this country is a haven for the proceeds of international crime. The head of the National Crime Agency, Donald Toon, notes that "the London property market has been skewed by laundered money. Prices are being artificially driven up by overseas criminals who want to sequester their assets here in the UK."
It's hardly surprising, given the degree of oversight. Private Eye has produced a map of British land owned by companies registered in offshore tax havens. The holdings amount to 1.2 million acres, including much of our prime real estate. Among those it names as beneficiaries are a cast of Russian oligarchs, oil sheikhs, British aristocrats and newspaper proprietors. These are the people for whom government policy works, and the less regulated the system that enriches them, the happier they are.
The speculative property market is just one current in the great flow of cash that sluices through Britain while scarcely touching the sides. The financial sector exploits an astonishing political privilege: the City of London is the only jurisdiction in the UK not fully subject to the authority of parliament. In fact, the relationship seems to work the other way. Behind the Speaker's chair in the House of Commons sits the Remembrancer, whose job is to ensure that the interests of the City of London are recognised by the elected members. (A campaign to rescind this privilege — Don't Forget the Remembrancer — will be launched very soon). The City has one foot in the water: it is a semi-offshore state, a bit like the UK's Crown dependencies and overseas territories, tax havens legitimised by the Privy Council. Britain's financial secrecy undermines the tax base while providing a conduit into the legal economy for gangsters, kleptocrats and drug barons.
Even the more orthodox financial institutions deploy a long succession of scandalous practices: pension mis-selling, endowment mortgage fraud, the payment protection insurance con, Libor rigging. A former minister in the last government, Lord Green, ran HSBC while it engaged in money laundering for drugs gangs, systematic tax evasion and the provision of services to Saudi and Bangladeshi banks linked to the financing of terrorists. Sometimes the UK looks to me like an ever-so-civilised mafia state.
At next month's Conservative party conference, corporate executives will pay £2,500 to sit with a minister. Doubtless, because we are assured that there is no link between funding and policy, they will spend the day discussing the weather and the films they have seen. If we noticed such arrangements overseas, we might be inclined to regard them as corruption. But that can't be the case here, not least because the invitation explains that "fees associated with business day & dinner are considered a commercial transaction and therefore do not constitute a political donation."
The government also insists that there is no link between political donations and seats in the House of Lords. But a study by researchers at Oxford University found that the probability of so many major donors arriving there by chance is 1.36 x 10-38: roughly "equivalent to entering the National Lottery and winning the jackpot 5 times in a row". Why does the Lords remain unreformed? Because it permits plutocratic power to override democracy. Both rich and poor are kept in their place.
Governed either by or on behalf of the people who fleece us, we cannot be surprised to discover that all public services are being re-engineered for the benefit of private capital. Nor should we be surprised when governments help to negotiate, without public consent, treaties such as TTIP and CETA (the Comprehensive Economic and Trade Agreement), which undermine the sovereignty of both parliament and the law. Aesop's observation that "we hang the petty thieves and appoint the great ones to public office" remains true in spirit, though hanging has been replaced by community payback.
Wherever you sniff in British public life, something stinks: I could fill this newspaper with examples. But, while every pore oozes corruption, our task, we are told, is merely to trim the nails of the body politic.
To fail to confront this system is to collaborate with it. Who on the left would wish to stand on the sidelines as this carve-up continues? Who would vote for anything but sweeping change?
Saturday, 16 November 2013
Why even atheists should be praying for Pope Francis
Francis could replace Obama as the pin-up on every liberal and leftist wall. He is now the world's clearest voice for change
'On Thursday, Pope Francis visited the Italian president, arriving in a blue Ford Focus, with not a blaring siren to be heard.' Photograph: Gregorio Borgia/AP
That Obama poster on the wall, promising hope and change, is looking a little faded now. The disappointments, whether over drone warfare or a botched rollout of healthcare reform, have left the world's liberals and progressives searching for a new pin-up to take the US president's place. As it happens, there's an obvious candidate: the head of an organisation those same liberals and progressives have long regarded as sexist, homophobic and, thanks to a series of child abuse scandals, chillingly cruel. The obvious new hero of the left is the pope.
Only installed in March, Pope Francis has already become a phenomenon. His is the most talked-about name on the internet in 2013, ranking ahead of "Obamacare" and "NSA". In fourth place comes Francis's Twitter handle, @Pontifex. In Italy, Francesco has fast become the most popular name for new baby boys. Rome reports a surge in tourist numbers, while church attendance is said to be up – both trends attributed to "the Francis effect".
His popularity is not hard to fathom. The stories of his personal modesty have become the stuff of instant legend. He carries his own suitcase. He refused the grandeur of the papal palace, preferring to live in a simple hostel. When presented with the traditional red shoes of the pontiff, he declined; instead he telephoned his 81-year-old cobbler in Buenos Aires and asked him to repair his old ones. On Thursday, Francis visited the Italian president – arriving in a blue Ford Focus, with not a blaring siren to be heard.
Some will dismiss these acts as mere gestures, even publicity stunts. But they convey a powerful message, one of almost elemental egalitarianism. He is in the business of scraping away the trappings, the edifice of Vatican wealth accreted over centuries, and returning the church to its core purpose, one Jesus himself might have recognised. He says he wants to preside over "a poor church, for the poor". It's not the institution that counts, it's the mission.
All this would warm the heart of even the most fervent atheist, except Francis has gone much further. It seems he wants to do more than simply stroke the brow of the weak. He is taking on the system that has made them weak and keeps them that way.
"My thoughts turn to all who are unemployed, often as a result of a self-centred mindset bent on profit at any cost," he tweeted in May. A day earlier he denounced as "slave labour" the conditions endured by Bangladeshi workers killed in a building collapse. In September he said that God wanted men and women to be at the heart of the world and yet we live in a global economic order that worships "an idol called money".
There is no denying the radicalism of this message, a frontal and sustained attack on what he calls "unbridled capitalism", with its "throwaway" attitude to everything from unwanted food to unwanted old people. His enemies have certainly not missed it. If a man is to be judged by his opponents, note that this week Sarah Palin denounced him as "kind of liberal" while the free-market Institute of Economic Affairs has lamented that this pope lacks the "sophisticated" approach to such matters of his predecessors. Meanwhile, an Italian prosecutor has warned that Francis's campaign against corruption could put him in the crosshairs of that country's second most powerful institution: the mafia.
As if this weren't enough to have Francis's 76-year-old face on the walls of the world's student bedrooms, he also seems set to lead a church campaign on the environment. He was photographed this week with anti-fracking activists, while his biographer, Paul Vallely, has revealed that the pope has made contact with Leonardo Boff, an eco-theologian previously shunned by Rome and sentenced to "obsequious silence" by the office formerly known as the "Inquisition". An encyclical on care for the planet is said to be on the way.
Many on the left will say that's all very welcome, but meaningless until the pope puts his own house in order. But here, too, the signs are encouraging. Or, more accurately, stunning. Recently, Francis told an interviewer the church had become "obsessed" with abortion, gay marriage and contraception. He no longer wanted the Catholic hierarchy to be preoccupied with "small-minded rules". Talking to reporters on a flight – an occurrence remarkable in itself – he said: "If a person is gay and seeks God and has good will, who am I to judge?" His latest move is to send the world's Catholics a questionnaire, seeking their attitude to those vexed questions of modern life. It's bound to reveal a flock whose practices are, shall we say, at variance with Catholic teaching. In politics, you'd say Francis was preparing the ground for reform.
Witness his reaction to a letter – sent to "His Holiness Francis, Vatican City" – from a single woman, pregnant by a married man who had since abandoned her. To her astonishment, the pope telephoned her directly and told her that if, as she feared, priests refused to baptise her baby, he would perform the ceremony himself. (Telephoning individuals who write to him is a Francis habit.) Now contrast that with the past Catholic approach to such "fallen women", dramatised so powerfully in the current film Philomena. He is replacing brutality with empathy.
Of course, he is not perfect. His record in Argentina during the era of dictatorship and "dirty war" is far from clean. "He started off as a strict authoritarian, reactionary figure," says Vallely. But, aged 50, Francis underwent a spiritual crisis from which, says his biographer, he emerged utterly transformed. He ditched the trappings of high church office, went into the slums and got his hands dirty.
Now inside the Vatican, he faces a different challenge – to face down the conservatives of the curia and lock in his reforms, so that they cannot be undone once he's gone. Given the guile of those courtiers, that's quite a task: he'll need all the support he can get.
Some will say the world's leftists and liberals shouldn't hanker for a pin-up, that the urge is infantile and bound to end in disappointment. But the need is human and hardly confined to the left: think of the Reagan and Thatcher posters that still adorn the metaphorical walls of conservatives, three decades on. The pope may have no army, no battalions or divisions, but he has a pulpit – and right now he is using it to be the world's loudest and clearest voice against the status quo. You don't have to be a believer to believe in that.
Wednesday, 22 May 2013
Match Fixing? It's people like us doing it
It's convenient to blame the underworld for every instance of cricket fixing, but it's ordinary punters who are behind many of them
Ed Hawkins
May 22, 2013
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In Focus: Corruption in cricket
Teams: India
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In late 2011 and 2012 I met with some of India's illegal bookmakers, stayed in their homes, ate with their families, attended cricket matches with them, watched - and helped - them take bets.
"You were brave," many people say. "Did you not fear for your life?" The answer is the same each time. "No, they were perfectly charming."
Ah, but that is all part of the act, you might say. They are skilled manipulators, those bookies; one minute a flashing smile, the next a flashing blade. And so it has been following the allegations about three Rajasthan players having indulged in spot-fixing in the Indian Premier League.
It is de rigueur these days when such a story breaks that attention is immediately turned on India's underworld, the mafia dons who cajole players into performing favours on the pitch. If they don't put up their side of the bargain, threats and intimidation follow. D Company, the mafia organisation run by the infamous Dawood Ibrahim, usually gets a mention. Then the stock phrase "Once a player is in, he can't get out" trips off the tongue.
But is that really true? Are there players who fear for their life if they fail to concede a certain number of runs off an over? It is possible, but there is evidence that suggests that the underworld grip that threatens to choke a player is a convenient excuse for those caught with their hands in the till.
The "fix" of the sort that Sreesanth, Ankeet Chavan and Ajit Chandila have been accused of is, in polite terms, chicken feed to D Company. They are far more interested in organising match results, where returns are incomparable to those from spot-fixing. This smacks of a low level scam, summed up succinctly by Vinay, a bookie from Bhopal. "We are trying to make our living in a corrupt country, and we do this by taking any opportunity we can," he says.
Quite. The average Indian bookmaker is nothing if not an opportunist, and it is that personality trait, rather than a tendency for violence, that plays a part in fixes. It is an unpalatable truth for cricket that any bookmaker, or punter, given access to a player, can organise a fix without using the word "mafia" or whispering the name "Dawood". Yes, there is an organised crime network at play but the majority of corruption attempted is by small groups of ordinary folk.
To understand why spot-fixing can be so easy to organise is to understand how the illegal Indian gambling market operates, and therefore how it can be manipulated.
There are estimated to be more than 70,000 bookmakers in India. Despite it being unregulated, it is highly organised and works much like a legalised system. In England the big four bookmakers might be considered to be William Hill, Ladbrokes, Bet365 and Coral. Each of those bookies sets their own odds, and supplies them to the managers of their shops dotted all around the country.
In India there are four big bookmakers, known as the syndicates. Two have their roots in Delhi and the others in Mumbai and Nagpur. Each of those bookies sets their own odds and supplies them to managers around the country. These "managers" - in actual fact they are bookmakers themselves - who take bets from their customers are ranked by the size of their customer base. First-tier bookmakers have up to or more than 1000. A fourth-tier bookmaker might have only 20 or 30. Like a franchise arrangement, the "managers" pay for the goods supplied.
There are, though, two significant differences between the English and Indian models. The first is that whereas Hill's and Ladbrokes might offer a wide variety of bets, in India you can only bet on four outcomes: the match result, the innings runs, brackets (a certain number of runs to be scored in a certain number of overs), and what is known as the lunch favourite. The lunch favourite is where the customer is offered a bet on following the team that is the favourite at the lunch break or innings break.
The second is that where Hill's will offer different prices from Ladbrokes for each of their various segments in an IPL match, the Indian system will be almost uniform; the majority of bookmakers will be using the same prices. One set of odds for only four markets, with each syndicate doing its share of the work.
Each of those four syndicates has their own area of expertise. The top Delhi syndicate will look after betting before a ball has been bowled, providing odds pre-match. When the game starts, its work generally stops. The other syndicate connected to Delhi, known as the Shibu, operates the brackets odds. The Mumbai syndicate will take care of the ball-by-ball betting for match odds and innings runs. The fourth, the Nagpur syndicate, is a rival to the Mumbai operation.
So we have a swathe of bookmakers all using the same odds. It is the perfect environment for corruption.
However, it is not an exact science and the anatomy of fixes and the perpetrators can differ. Indeed, Vinay, who is a first-tier bookmaker and close to the syndicate kingpins, estimates that half of all fixes are organised by bookmakers, the rest by run-of-the-mill punters - any Tom, Dick, or Hari who has a relationship with a player.
| There are estimated to be more than 70,000 bookmakers in India. Despite it being unregulated, it is highly organised and works much like a legalised system | |||
The most obvious fixes can come right from the top of the tree: the syndicates, who some believe take their orders from D Company. If a syndicate has organised for a team to lose or paid a bowler to concede a certain number of runs, they can supply "fake" odds to the tens of thousands of bookmakers, influencing millions of gamblers to bet the way they want them to.
If we use a bowler agreeing to concede more than 13 runs an over as an example, the ability to coin the crores from market manipulation is clear. The bracket, normally set for the first six overs in an IPL match, is an over-or-under bet. The syndicate will estimate that, say, between 42 and 45 runs will be scored. Gamblers will reckon it will be lower/higher and bet accordingly.
Before a ball has been bowled the syndicate would have set the bracket, usually for the number of runs in the first six overs, at a figure that punters would have reckoned was too high, tricking them into going low. It is an artful fraud and not 100% foolproof because of the need to get the "fake" bracket quote right from the start.
If the syndicate was not in on the fix then it would have been created by a group of bookmakers who had decided to operate outside of the system. According to sources in the illegal market, this is the most likely scenario in the current case. This theory holds water, given the raft of bookmakers arrested. They could have manipulated the odds in exactly the same way a syndicate would, by convening what is known as a "party", a group of bookmakers who have agreed to pool resources and maximise profits.
Another option would have been for this "party" to become punters for the day, and place multiple bets (the average bet in India dwarfs those in markets where betting is legal, and is estimated at Rs 100,000 or around $1800) by going "over" the brackets, cosseted by their arrangement with the crooked player. They would have roped in friends and family to place the wagers with as many bookies as possible. This is the method used by an ordinary punter with inside information, proving that you don't need to be a bookmaker to fix a match.
What links punter and bookmaker - and there is a relative war for inside information on the illegal markets with one trying to outdo the other - is the acceptance that both are taking a risk. They know that, still, this is a gamble. A bet. Circumstances may conspire against them, so the profligate over organised or the maiden ordered may not transpire. If not, the player pays back the money. Call it honour among thieves.
Wednesday, 7 November 2012
The UK's Protection racket in the Middle East
The Gulf protection racket is corrupt and dangerous folly
Sooner or later the Arab despots David Cameron is selling arms to will fall, and the states that backed them will pay the price
Illustration by Helen Wakefield
On the nauseating political doublespeak scale, David Cameron's claim to "support the Arab spring" on a trip to sell weapons to Gulf dictators this week hit a new low. No stern demands for free elections from the autocrats of Arabia – or calls for respect for human rights routinely dished out even to major powers like Russia and China.
As the kings and emirs crack down on democratic protest, the prime minister assured them of his "respect and friendship". Different countries, he explained soothingly in Abu Dhabi, needed "different paths, different timetables" on the road to reform: countries that were western allies, spent billions on British arms and sat on some of the world's largest oil reserves in particular, he might have added by way of explanation.
Cameron went to the Gulf as a salesman for BAE Systems – the private arms corporation that makes Typhoon jets – drumming up business from the United Arab Emirates, Saudi Arabia and Oman, as well as smoothing ruffled feathers over British and European parliamentary criticism of their human rights records on behalf of BP and other companies.
No wonder the prime minister restricted media coverage of the jaunt. But, following hard on the heels of a similar trip by the French president, the western message to the monarchies was clear enough: Arab revolution or not, it's business as usual with Gulf despots.
The spread of protest across the Arab world has given these visits added urgency. A year ago, in the wake of the uprisings in Tunisia and Egypt, it seemed the Gulf regimes and their western backers had headed off revolt by crushing it in Bahrain, buying it off in Saudi Arabia, and attempting to hijack it in Libya and then Syria – while successfully playing the anti-Shia sectarian card.
But popular unrest has now reached the shores of the Gulf. In Kuwait, tens of thousands of demonstrators, including Islamists, liberals and nationalists, have faced barrages of teargas and stun grenades as they protest against a rigged election law, while all gatherings of more than 20 have been banned.
After 18 months of violent suppression of the opposition in Bahrain, armed by Britain and America, the regime has outlawed all anti-government demonstrations. In western-embraced Saudi Arabia, protests have been brutally repressed, as thousands are held without charge or proper trial.
Meanwhile, scores have been jailed in the UAE for campaigning for democratic reform, and in Britain's favourite Arab police state of Jordan, protests have mushroomed against a Kuwaiti-style electoral stitchup. London, Paris and Washington all express concern – but arm and back the autocrats.
Cameron insists they need weapons to defend themselves. When it comes to the small arms and equipment Britain and the US supply to Saudi Arabia, Bahrain and other Gulf states, he must mean from their own people. But if he's talking about fighter jets, they're not really about defence at all.
This is effectively a mafia-style protection racket, in which Gulf regimes use oil wealth their families have commandeered to buy equipment from western firms they will never use. The companies pay huge kickbacks to the relevant princelings, while a revolving door of political corruption provides lucrative employment for former defence ministers, officials and generals with the arms corporations they secured contracts for in office.
Naturally, western leaders and Arab autocrats claim the Gulf states are threatened by Iran. In reality, that would only be a risk if the US or Israel attacked Iran – and in that case, it would be the US and its allies, not the regimes' forces, that would be defending them. Hypocrisy doesn't begin to describe this relationship, which has long embedded corruption in a web of political, commercial and intelligence links at the heart of British public life.
But support for the Gulf dictatorships – colonial-era feudal confections built on heavily exploited foreign workforces – is central to western control of the Middle East and its energy resources. That's why the US has major military bases in Kuwait, Qatar, the UAE, Oman and Bahrain.
The danger now is of escalating military buildup against Iran and intervention in the popular upheavals that have been unleashed across the region. Both the US and Britain have sent troops to Jordan in recent months to bolster the tottering regime and increase leverage in the Syrian civil war. Cameron held talks with emirates leaders this week about setting up a permanent British military airbase in the UAE.
The prime minister defended arms sales to dictators on the basis of 300,000 jobs in Britain's "defence industries". Those numbers are inflated and in any case heavily reliant on government subsidy. But there's also no doubt that British manufacturing is over-dependent on the arms industry and some of that support could usefully be diverted to, say, renewable technologies.
But even if morality and corruption are dismissed as side issues, the likelihood is that, sooner or later, these autocrats will fall – as did the Shah's regime in Iran, on which so many British and US arms contracts depended at the time. Without western support, they would have certainly been toppled already. As Rached Ghannouchi, the Tunisian leader whose democratic Islamist movement was swept to power in elections last year, predicted: "Next year it will be the turn of monarchies." When that happens, the western world risks a new backlash from its leaders' corrupt folly.
Sunday, 3 June 2012
This Cruel Austerity Experiment has Failed
The facts are clear. This cruel austerity experiment has failed
While the human cost of economic stupidity is all too visible, the world's leaders are paralysed by their dogma
A woman receives a free meal from a soup
kitchen organised by a Greek humanitarian group in Athens’ main Syntagma
Square. Photograph: Kostas Tsironis/AP
Last week was an awesome warning of where go-it-alone austerity
can lead. It produced some brutal evidence of where we end up when we
place finance above economy and society. The markets are now betting not
just on the break-up of the euro but on the arrival of a new economic
dark age. The world economy is edging nearer to the abyss, and
policymakers, none more than in Britain, are paralysed by the
stupidities of their home-spun economics. Yanis Varoufakis,
ex-speechwriter for former Greek prime minister George Papandreou and
now an economics professor in the US, said last week: "There is
precisely zero chance of austerity working. It is the same as thinking
you can escape from gravity by waving your arms up and down."
It could hardly be more sobering. Money has flooded out of Spain, Greece and the peripheral European economies. Signs of the crisis range from Athen's soup kitchens to Spain's crowds of indignados protesting in the streets against austerity and a broken capitalism. Youth unemployment is sky-high. Less visible is the avalanche of money flowing into hoped-for safe havens in the US, Germany and even Britain. The last time the British government could sell government bonds at interest rates as low as today's was in the early 1700s.
George Osborne and his acolytes proclaim this as a triumph of the government's economic policies. They are gravely mistaken. Rather it portends fears that the international economic order may collapse because if so many countries are simultaneously pursuing austerity, where's growth to come from?
Virtually everywhere you look there are signs of a weakening world economy. At home, manufacturing suffered its biggest plunge for three years, and this in an economy already suffering its longest depression since the 19th century. American jobs growth is petering out. Unemployment in Europe averages 11%. Even China witnessed a sharp fall away in factory activity in May.
Yet none of this should be a surprise. We live in the aftermath of one of the biggest financial and intellectual mistakes ever made. For a generation the world, with the London/New York financial axis at its heart, surrendered to the specious theory that lending and financial contracts could grow many times faster than the underlying economy. There was a blind belief that in a free market banks could not make mistakes. Free markets didn't make mistakes – only clumsy bureaucratic states made economic mistakes. Or so they said. Financial alchemists, guided by the maxims of free market fundamentalism, could make no such errors.
Except that they did. The result was the financial crisis of 2008. Had governments not underwritten their overstretched banks with trillions of dollars, euros and pounds, an even worse global slump would have ensued. But while the banks could continue trading, the hundreds of trillions of loans and financial contracts they had made did not go away.
And because governments had guaranteed their deposits, as in Ireland, or had to inject capital into them as Spain has been doing all last week, this private bank debt has steadily become public debt. Here is a classic case where all the gains were privatised, and all the losses were socialised. It was the much-maligned state that had to step in and clear up the mess left behind by the private sector. The free market wasn't so free after all – in fact it proved astonishingly expensive for the public purse. People across Europe still pay the price.
This is no solution. Overstretched banks have become more cautious about lending new cash; and even strong banks are caught up in the backwash because if they step into the breach they could fall into a vortex of falling property prices and declining economic activity, becoming weak in turn. So as banks stand aside from their crucial function of generating credit, governments and central banks must step in to generate the demand that has now disappeared.
But they have not done so to a sufficient degree. Part of the problem is that the more bank debt that governments guarantee, the less room for manoeuvre they feel they have – especially as their stagnating economies forces up welfare spending and depresses tax revenues.
This is not just an economic but a moral necessity, they argue. Living within one's means rather than "maxing" out on debt appeals to American, British and German individualistic Protestantism. Inflation is even more a sign of moral degradation: it means reneging on promises, rewarding spendthrifts and penalising savers. We had the good years. Now we must take our medicine. The public and private sectors must retrench simultaneously worldwide. Enterprise and free markets will do the rest. The "march of the makers" will step in to fill the void left by public austerity measures.
This is a first-order moral and economic mistake. Human beings need each other for mutual support. In economic terms this means that no individual, either as a person or a company, can manage existential risk by themselves. That risk needs to be shared and mitigated otherwise the risk is not accepted. There would be no enterprise or innovation – the risks of failure too great. That is why there is a role for both private and public sectors. It is governments who provide the means through which we express our social obligations and pool our risks.
This is the heart of Keynesian economics – a different set of moral and economic propositions than those which prevail. Today we can see an almost laboratory experiment on a global scale of why Keynes was right and his detractors wrong. There is no doubt what Keynes would advocate now: a government-sponsored increase in demand co-ordinated across as many countries as possible and an acceptance of a temporary but closely managed increase in inflation to reduce the real value of debt.
The enormous legacy of private debt – whether in Britain, Germany, Spain, the US or Greece – and the fiendishly complicated way so many of the loans have been organised and distributed around the world financial system cannot be easily unwound. Sir Philip Hampton, chair of RBS, warned this week it might take a generation for RBS investors to recover their money.
The choice is thus stark. To commit to decades of economic stagnation, the break-up of the eurozone, the risk of trade protection and autarchic economic policies, the dismantling of the west's social contracts, the imposition of high unemployment and the political fallout that will follow.
Or to change course.
The technical means are relatively simple. Governments must replace targets for inflation with targets for the growth of prices and growth of output combined. Central banks should inject money into their financial systems by offering to buy new bank loans made to support new investment, new innovation or new infrastructure – helped by partial government guarantees.
Governments also need to increase demand. They can do this directly – with targeted and time-limited tax cuts or spending increases. They can also move indirectly, taxing the rich more aggressively and re-allocating the proceeds in tax cuts to those on middle incomes and lower who tend to spend more – along the lines that both presidents Obama and Hollande have proposed. There is also a case for a financial transactions tax – both to raise crucial revenue and to cap the growth and frenetic speed of financial transactions. Finance has become too powerful. It needs constraining.
Will any of this happen? The west is at a cross-roads, and although such proposals will be fiercely opposed by the British, German and American right they need to be beaten back. After all, it is their ideas that have brought us to this pass. It is not too fanciful to argue that the future of western capitalism depends upon how this argument plays out – and how quickly, if at all, there is a change of course.
It could hardly be more sobering. Money has flooded out of Spain, Greece and the peripheral European economies. Signs of the crisis range from Athen's soup kitchens to Spain's crowds of indignados protesting in the streets against austerity and a broken capitalism. Youth unemployment is sky-high. Less visible is the avalanche of money flowing into hoped-for safe havens in the US, Germany and even Britain. The last time the British government could sell government bonds at interest rates as low as today's was in the early 1700s.
George Osborne and his acolytes proclaim this as a triumph of the government's economic policies. They are gravely mistaken. Rather it portends fears that the international economic order may collapse because if so many countries are simultaneously pursuing austerity, where's growth to come from?
Virtually everywhere you look there are signs of a weakening world economy. At home, manufacturing suffered its biggest plunge for three years, and this in an economy already suffering its longest depression since the 19th century. American jobs growth is petering out. Unemployment in Europe averages 11%. Even China witnessed a sharp fall away in factory activity in May.
Yet none of this should be a surprise. We live in the aftermath of one of the biggest financial and intellectual mistakes ever made. For a generation the world, with the London/New York financial axis at its heart, surrendered to the specious theory that lending and financial contracts could grow many times faster than the underlying economy. There was a blind belief that in a free market banks could not make mistakes. Free markets didn't make mistakes – only clumsy bureaucratic states made economic mistakes. Or so they said. Financial alchemists, guided by the maxims of free market fundamentalism, could make no such errors.
Except that they did. The result was the financial crisis of 2008. Had governments not underwritten their overstretched banks with trillions of dollars, euros and pounds, an even worse global slump would have ensued. But while the banks could continue trading, the hundreds of trillions of loans and financial contracts they had made did not go away.
And because governments had guaranteed their deposits, as in Ireland, or had to inject capital into them as Spain has been doing all last week, this private bank debt has steadily become public debt. Here is a classic case where all the gains were privatised, and all the losses were socialised. It was the much-maligned state that had to step in and clear up the mess left behind by the private sector. The free market wasn't so free after all – in fact it proved astonishingly expensive for the public purse. People across Europe still pay the price.
This is no solution. Overstretched banks have become more cautious about lending new cash; and even strong banks are caught up in the backwash because if they step into the breach they could fall into a vortex of falling property prices and declining economic activity, becoming weak in turn. So as banks stand aside from their crucial function of generating credit, governments and central banks must step in to generate the demand that has now disappeared.
But they have not done so to a sufficient degree. Part of the problem is that the more bank debt that governments guarantee, the less room for manoeuvre they feel they have – especially as their stagnating economies forces up welfare spending and depresses tax revenues.
But the larger problem is intellectual.
The dominant ideology of the day – from the same roots that delivered
the crisis – forbids it. A consensus stretching from US Republicans
through to Angela Merkel's Christian Democrats via George Osborne's
Treasury continues to claim that the state is the source of economic
bad. The state threatens enterprise, invites damaging taxation, and is
the root cause of spreading inflation. The state must balance the books
just as the private sector must.
This is not just an economic but a moral necessity, they argue. Living within one's means rather than "maxing" out on debt appeals to American, British and German individualistic Protestantism. Inflation is even more a sign of moral degradation: it means reneging on promises, rewarding spendthrifts and penalising savers. We had the good years. Now we must take our medicine. The public and private sectors must retrench simultaneously worldwide. Enterprise and free markets will do the rest. The "march of the makers" will step in to fill the void left by public austerity measures.
This is a first-order moral and economic mistake. Human beings need each other for mutual support. In economic terms this means that no individual, either as a person or a company, can manage existential risk by themselves. That risk needs to be shared and mitigated otherwise the risk is not accepted. There would be no enterprise or innovation – the risks of failure too great. That is why there is a role for both private and public sectors. It is governments who provide the means through which we express our social obligations and pool our risks.
This is the heart of Keynesian economics – a different set of moral and economic propositions than those which prevail. Today we can see an almost laboratory experiment on a global scale of why Keynes was right and his detractors wrong. There is no doubt what Keynes would advocate now: a government-sponsored increase in demand co-ordinated across as many countries as possible and an acceptance of a temporary but closely managed increase in inflation to reduce the real value of debt.
The enormous legacy of private debt – whether in Britain, Germany, Spain, the US or Greece – and the fiendishly complicated way so many of the loans have been organised and distributed around the world financial system cannot be easily unwound. Sir Philip Hampton, chair of RBS, warned this week it might take a generation for RBS investors to recover their money.
The choice is thus stark. To commit to decades of economic stagnation, the break-up of the eurozone, the risk of trade protection and autarchic economic policies, the dismantling of the west's social contracts, the imposition of high unemployment and the political fallout that will follow.
Or to change course.
The technical means are relatively simple. Governments must replace targets for inflation with targets for the growth of prices and growth of output combined. Central banks should inject money into their financial systems by offering to buy new bank loans made to support new investment, new innovation or new infrastructure – helped by partial government guarantees.
Governments also need to increase demand. They can do this directly – with targeted and time-limited tax cuts or spending increases. They can also move indirectly, taxing the rich more aggressively and re-allocating the proceeds in tax cuts to those on middle incomes and lower who tend to spend more – along the lines that both presidents Obama and Hollande have proposed. There is also a case for a financial transactions tax – both to raise crucial revenue and to cap the growth and frenetic speed of financial transactions. Finance has become too powerful. It needs constraining.
Will any of this happen? The west is at a cross-roads, and although such proposals will be fiercely opposed by the British, German and American right they need to be beaten back. After all, it is their ideas that have brought us to this pass. It is not too fanciful to argue that the future of western capitalism depends upon how this argument plays out – and how quickly, if at all, there is a change of course.
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